Non-dom tax changes – why planning is vital

At a glance

• New tax arrangements for non-domiciled residents in the UK were introduced on 6 April 2025. Tax is now applied on all foreign income and gains for previous non-doms at the same rates and terms as for any other UK taxpayer.
• New arrivals who come to the UK after 10 or more consecutive years living outside the UK can get four years’ tax relief on foreign income and gains (FIG regime).
• Domicile is no longer a factor for inheritance tax purposes.

The non-dom tax regime has seen a monumental overhaul in the past year. New regulations, introduced in April 2025, radically changed how foreign income and gains are taxed for individuals living in the UK who had previous non-dom status. There are also big implications for inheritance tax. 

Our in-depth guide covers the tax relief available and includes tips on mitigating a growing tax liability from overseas wealth.

What is a non-dom?

A non-domiciled person – known as a ‘non-dom’ – can be defined as someone who lives in the UK and is resident here for tax purposes. However, they consider their permanent home, or domicile, to be another country.

Prior to the tax regime change in April 2025, non-doms were only charged tax on their foreign income and gains when that money was brought into the UK, such as being paid into a UK bank account. This was known as the remittance basis for non-dom tax.

Previously non-doms with foreign income or gains that accounted to less than £2,000 in any tax year did not have to pay tax on the money when it was brought to the UK. Tax also did not apply if the FIG was not brought to the UK.

But the remittance basis tax regime has now ended.

What’s changed for non-doms in the UK?

From 6 April 2025, individuals with previous non-dom status in the UK who had used the remittance basis for their foreign income and gains switched to the residence-based tax regime.

With the exception of non-doms eligible for the four-year tax relief FIG regime (more on this below), all non-doms in the UK must now pay tax in the same way as other UK taxpayers. Effectively the non-dom status has gone. It means tax allowances and rates on overseas income and growth are applied in the same way they would be for any other UK taxpayer.

The £2,000 limit has also been scrapped. It means those who have foreign income and gains which exceed personal allowances or nil rate bands must declare it on a self-assessment tax return.

Overseas income and gains from previous tax years, prior to April 2025, will be treated as falling under the old remittance tax regime.

What tax reliefs are available?

Foreign income and gains (FIG) regime

If someone has lived outside the UK for at least 10 years consecutively but then move to live in the UK, they can claim 100% tax relief through the FIG regime for four years. However, in doing so they will lose their personal tax allowance (for income tax) and any capital gains tax allowance (currently £3,000 per tax year) in any year they claim FIG tax relief.

Temporary repatriation facility

Former remittance basis tax users who have foreign income and gains arising before 6 April 2025 can have these taxed and remitted at a lower tax rate for up to three tax years, 2025-26, 2026-27 and 2027-28. This is a temporary measure, hence the name ‘temporary repatriation facility’. The tax rate in 2025-26 and 2026-27 is 12%, while the rate in 2027-28 is 15%. There is no relief or allowance for any foreign tax already paid on the money.

Taxpayers don’t have to remit the money to the UK to pay the lower tax rate, although they can if they wish. They can pay the tax charge and remit the money at a later time.

What do the changes mean for inheritance tax?

Prior to the tax rule changes in April 2025, the estates of non-doms were only charged inheritance tax (IHT) on their UK-based assets, unless the deceased had been resident in the UK for 15 years out of the past 20.

But since 6 April 2025, domicile is no longer a factor for IHT liability. Instead, the new rules for IHT are based on long-term residency in the UK. Inheritance tax is now charged on the transfer of overseas assets or on death for all long-term UK residents. This is subject to strict criteria which is applied on residency status.

The exception may be some overseas assets held in trust, depending on a range of factors, including the residency of the deceased at the time the trust was put in place, among other criteria.

What is the residency test for IHT?

Someone is judged by HMRC to be a long-term UK resident if they have lived in the UK for the previous 10 consecutive years, or for a total of 10 years or 
more within the previous 20-year period.

Since 6 April 2025, the non-UK (overseas) assets of long-term UK residents may be liable to IHT if the individual makes a transfer of assets or dies.

How can FIG taxpayers mitigate a UK tax bill?

There are a number of ways long-term UK residents can mitigate and plan for their UK tax bill on foreign income and gains.

• Make use of the FIG and TRF tax reliefs, where relevant.
• Use the time period of the transition arrangements to review your financial planning and consider moving to other more tax-efficient jurisdictions.
• Get specialist tax and financial advice to help with long-term planning.

Double taxation

Some taxpayers may be able to claim foreign tax credit relief on their UK tax return for the tax owed on their foreign income and gains. This is where the foreign income and gains have already been taxed in another country, effectively resulting in double taxation.

The specific tax relief will depend on the country where your income and assets were taxed, and the specifics of that country’s double taxation agreement with the UK.

The levels and bases of taxation and reliefs from taxation can change at any time. Tax relief is dependent on individual circumstances.

SJP Approved 31/03/2026